GST inversion leading to input credit buildup, fertiliser industry urges clarification: FAI chief

New Delhi [India], December 10 (ANI): The Fertiliser Association of India (FAI) has sought key GST clarifications to ease financial pressure on the fertiliser sector, flagging that tax rate inversion is continuing to result in the accumulation of input tax credits.

Speaking to ANI, FAI Chairman S. Sankarasubramanian said the industry has been urging the government to align GST rates on key raw materials such as ammonia and sulphuric acid with the 5 per cent tax applicable on finished fertiliser products. He said this alignment would help reduce production costs and improve the competitiveness of fertiliser manufacturers, particularly in the phosphatic segment.

While recent GST reforms have offered some relief, Sankarasubramanian noted that they have not fully resolved the issue of unutilised credits.

“At present, phosphatic fertilisers attract GST at 5 per cent, while several inputs were earlier taxed at 18 per cent and have now been corrected to 5 per cent. Despite this reduction, a structural inversion remains because fertiliser prices include a subsidy component that falls outside the GST value. This leads to continued accumulation of input tax credit,” he explained.

Finished phosphatic and potassic (P&K) fertilisers are taxed at 5 per cent, whereas major inputs such as ammonia and sulphuric acid were taxed at higher rates. Combined with subsidies not forming part of the GST supply value, this mismatch has resulted in large volumes of blocked ITC, straining working capital and affecting industry efficiency.

Speaking on the sidelines of the FAI Annual Seminar 2025, the FAI Chairman welcomed the recent changes introduced by the finance ministry.

“The reduction of GST on raw materials like ammonia and sulphuric acid from 18 per cent to 5 per cent has helped ease the problem of credit accumulation,” he said, while adding that the core imbalance between input and output taxation still persists.

He said the industry has consistently sought government intervention and has approached the finance ministry through the Department of Fertilisers, requesting a mechanism to refund accumulated input tax credit for phosphatic fertilisers. “We are hopeful that this issue will be addressed soon,” he said.

On subsidy reforms, Sankarasubramanian welcomed the government’s proposal to move towards direct benefit transfer (DBT) to farmers instead of routing subsidies through fertiliser manufacturers.

“Under the existing DBT framework, subsidies are paid to the industry while farmers receive fertilisers at subsidised prices,” he said.

He added that the Department of Fertilisers is planning pilot projects in select states and districts. “We have read about the recent announcement. Pilot trials are likely to be conducted in some states in South India and a few districts. This could be a game changer,” he said.

According to him, the move would give farmers greater choice and control. “It places decision-making power directly in the hands of farmers regarding the fertilisers they use. As an industry, we support this initiative and welcome the government’s approach,” Sankarasubramanian said. (ANI)

How significantly will GST influence the Budget 2026 calculations?

The Goods and Services Tax (GST) was rolled out by the Union Government in July 2017 with the objective of consolidating multiple state and central indirect taxes such as VAT, excise duty, and service tax. This landmark reform replaced a fragmented tax system with a single nationwide levy, substantially easing compliance requirements and reducing paperwork for businesses. By integrating various levies into one structure, GST brought greater uniformity to indirect taxation across India.

Why GST is important for India

Prior to GST, the movement of goods across states was often disrupted by varied tax regimes and numerous check posts. The introduction of GST eliminated these inefficiencies by subsuming major indirect taxes and establishing a common national market. A key benefit of this system has been the uninterrupted availability of Input Tax Credit (ITC), which lowered cascading taxes for manufacturers and helped reduce costs for end consumers.

GST has also accelerated the shift towards technology-based compliance. Processes such as online registration, e-way bills, and digital return filing have contributed to the formalisation of the economy. This transition has widened the tax base, improved transparency, and enhanced accountability. A simplified and standardised tax structure has also helped check tax evasion, ensured steadier revenue inflows, and strengthened supply chains across sectors.

High expectations from GST despite rate rationalisation

Significant reforms were announced at the 56th GST Council meeting. The earlier four-rate structure—5%, 12%, 18%, and 28%—was streamlined into two principal slabs of 5% and 18%, along with a separate 40% rate for luxury and demerit goods. In addition, GST rates on several essential and FMCG products were reduced. Many items earlier taxed at 12% or 18% were shifted to the 5% slab, while several consumer durables and electronic goods moved from 28% to 18%. Small cars and motorcycles with engine capacity below 250cc were also brought down to the 18% rate.

Even after these reductions, GST revenues have shown resilience. In November 2025, collections stood at ₹1,70,276 crore, registering a 0.7% year-on-year increase. Between April and November 2025, cumulative gross GST collections amounted to ₹14,75,488 crore, reflecting a healthy annual growth of 8.9%, even after the implementation of GST 2.0 in September 2025.

Relevance for Budget 2026

GST revenue trends serve as a reliable barometer of economic activity, capturing patterns in consumption and business performance. At the same time, lower GST rates leave more disposable income in the hands of consumers, encouraging spending—an important factor in a consumption-led economy like India.

From a fiscal perspective, GST collections have a direct bearing on government expenditure. Any shortfall in expected GST revenue could complicate efforts to meet fiscal deficit targets, unless offset by alternative revenue streams or higher borrowing.

Following the September 2025 rate cuts, demand for consumer goods and automobiles picked up sharply, supported by festive-season spending. This momentum was reflected in GDP growth, which rose to 8.2% in the second quarter after recording 7.8% growth in the first quarter, outperforming expectations.

In sum, GST rate rationalisation has acted as a stabilising force for the Indian economy at a time of global uncertainty, geopolitical risks, and trade-related challenges.

Auto Suspension of GST Registration Under Rule 10A: What Taxpayers Need to Do Right Now

Introduction

Rule 10A of the CGST Rules makes it compulsory for newly registered taxpayers to provide their bank account details shortly after getting their GST registration. The rule aims to curb fake registrations, strengthen KYC verification, and ensure that only genuine businesses operate under the GST framework.

GSTN has now rolled out a stricter system that automatically suspends GST registrations if bank details are not submitted within the required time. This guide breaks down the updated rule, system automation, compliance steps, and what taxpayers should do to avoid suspension.

1. What Rule 10A Requires

Every registered taxpayer must provide their valid bank account details:

• Within 30 days from the grant of registration, or

• Before filing the first GSTR-1 or IFF,
  whichever happens first.

Who needs to comply

✔ Regular taxpayers
✔ Composition dealers
✔ Casual taxable persons
✔ SEZ units and developers

Who is exempt

❌ TCS collectors
❌ TDS deductors
❌ Suo-moto registrations
❌ OIDAR & NRTP (with an exception explained later)

2. Auto-Suspension of GST Registration

If a taxpayer does not upload their bank details within the deadline, the GST portal will:

→ Auto-suspend the GST registration

You can view the suspension order under:

Services → User Services → View Notices and Orders

What happens during suspension

• Filing of GSTR-1/IFF is blocked

• E-way bill generation stops

• Changes to core fields are restricted

• ITC to recipients may be flagged or blocked

• Business operations may face disruptions

This entire process is system-driven, with no officer approval required.

3. How to Add Bank Account Details

Bank details can be added online through:

Services → Registration → Amendment of Registration (Non-Core Fields)

You’ll need:

• Bank account number

• IFSC code

• Cancelled cheque / bank statement (as per portal format)

Once submitted, the details are updated in your registration profile.

4. Automatic Closure of Cancellation Proceedings

If the only reason for suspension was missing bank details, then:

→ The system will automatically drop the cancellation proceedings

once the bank details are added.

Your registration becomes active again without manual intervention.

5. When Auto-Drop Doesn’t Happen

Sometimes the automatic update may take longer. In that case, taxpayers can manually request closure:

Services → User Services → View Notices and Orders → Initiate Drop Proceedings

This option helps close the cancellation proceedings after the bank details are updated.

6. Special Cases & Exceptions

OIDAR & NRTP

Bank details are not mandatory unless:

• The OIDAR taxpayer selects “Representative Appointed in India – Yes”

In that situation, bank account details must be provided to ensure traceability within India.

7. What It Means for Taxpayers

Why This Matters

Not adding bank details on time can lead to:

• Automatic suspension of GST registration

• Inability to issue invoices properly

• E-way bill blockage

• Disruption of ITC for customers

• Possible cancellation of registration

Best Practices

• Upload bank details immediately after receiving your GSTIN

• Keep your cheque/bank statement ready

• Check notices regularly on the portal

• Ensure bank details are entered correctly to avoid delays

Conclusion

The auto-suspension rule under Rule 10A makes timely KYC compliance more crucial than ever. Submitting bank account details is now one of the first and most important steps after obtaining GST registration. With automated suspension and reinstatement features, taxpayers must stay alert and ensure compliance to avoid interruptions in business activities.

SC rules that renting residential premises for student hostel use is exempt from GST

NEW DELHI: The Supreme Court on Thursday ruled that leasing a residential property to an organisation that uses it as a hostel for students and working professionals is exempt from GST.

A bench comprising Justices JB Pardiwala and KV Viswanathan upheld the Karnataka High Court’s judgment, which had earlier held that renting a residential premises to an entity running a hostel for students and professionals qualifies for GST exemption.

The bench noted that the end-use of the property remains residential, and imposing 18% GST on the lease agreement between the property owners and M/s DTwelve Spaces Private Limited would ultimately burden students and working professionals. This, the court said, would defeat the legislative intent behind granting exemption for residential use.

The case involved a co-owner of a residential property with 42 rooms in Bengaluru. The owners had leased the property to M/s D Twelve Spaces Private Limited, which then operated it as a long-term hostel, with stays ranging from 3 to 12 months.

Seeking clarity on whether the leasing service qualified for GST exemption, the petitioner approached the Karnataka Authority for Advance Ruling (AAR). The AAR held that renting a residential dwelling for use as a residence did not fall under the exemption entry.

On appeal, the Appellate Authority for Advance Ruling (AAAR) maintained that a hostel is not a residential dwelling and denied the exemption.

However, the Karnataka High Court disagreed and ruled that leasing a residential property for use as a hostel for students and professionals is indeed exempt from GST—a view now affirmed by the Supreme Court.

GSTN Releases Advisory on Suspension of GSTR-3B Filing Access Effective December 2025

Purpose of Table 3.2 in GSTR-3B

Table 3.2 of Form GSTR-3B is meant to capture details of inter-state outward supplies made to the following categories:

• Unregistered buyers (B2C)

• Composition scheme taxpayers

• UIN holders

These figures are automatically drawn from the taxable supplies declared in Table 3.1 / 3.1.1 of GSTR-3B, and are system-generated on the basis of data reported in GSTR-1, GSTR-1A and IFF.

🔔 Important Update (Effective From the November 2025 Tax Period)

1️⃣ Table 3.2 Will No Longer Be Editable

Starting from the November 2025 return period, the values auto-populated in Table 3.2 of GSTR-3B will be locked and cannot be altered by taxpayers.
GSTR-3B must be filed strictly using the system-generated numbers.

This change aims to ensure seamless reconciliation between outward supply reporting (GSTR-1/IFF) and tax payment (GSTR-3B).

🔄 What To Do If Auto-Populated Values Are Wrong?

Corrections cannot be made in GSTR-3B.

2️⃣ Revisions Must Be Made Through GSTR-1A

If the figures in Table 3.2 are incorrect due to wrong reporting in GSTR-1/IFF, taxpayers should:

• File GSTR-1A for the same tax period to amend the entries.

• Once GSTR-1A is submitted, the changes will automatically reflect in Table 3.2.

• GSTR-3B can then be filed using the updated values.

Additional amendments can still be made later through GSTR-1/IFF of subsequent months, as per the normal amendment rules.

✔ Compliance Advisory

To minimize mismatches and avoid repeated corrections:

3️⃣ Ensure Correct Reporting in GSTR-1 / GSTR-1A / IFF

Taxpayers should:

• Review draft GSTR-1 or GSTR-1A carefully.

• Verify proper classification of inter-state supplies.

• Pay special attention to B2C inter-state reporting.

• File returns only after confirming the accuracy of all entries.

Since GSTR-3B will rely solely on system-populated values, accurate reporting in GSTR-1/GSTR-1A is crucial.

📌 Frequently Asked Questions (FAQs)

Q1. What is the new rule for Table 3.2?

From November 2025 onward, Table 3.2 of GSTR-3B becomes completely non-editable.
Taxpayers must use the auto-populated data derived from GSTR-1/GSTR-1A/IFF without any manual changes.

Q2. How can incorrect auto-populated values be corrected?

If the values are incorrect due to wrong entries in GSTR-1/IFF:

• File GSTR-1A for that tax period to modify details.

• After submission, the revised values will instantly update Table 3.2.

• Then you can proceed with filing GSTR-3B.

Further amendments can always be made in GSTR-1/IFF of upcoming periods.

Q3. How can I ensure error-free reporting in Table 3.2?

• Double-check all outward supply data before filing GSTR-1 or GSTR-1A.

• Immediately fix any inaccurate entries through GSTR-1A.

• Ensure correct classification of inter-state B2C supplies.

• Maintain consistency between outward supply returns and tax payment returns.

Accurate reporting prevents mismatches and avoids unnecessary compliance issues.

Q4. Until when can I file GSTR-1A for correcting Table 3.2 values?

GSTR-1A can be filed anytime after GSTR-1 is filed and up until GSTR-3B is submitted for that period.

This means you can correct Table 3.2 through GSTR-1A right up to the filing of GSTR-3B.

GSTN Releases Fresh FAQs on GSTR-9/9C for FY 2024-25 – What You Must Know

FAQs on GSTR-9/9C for FY 2024–25

Issued on: 4 December 2025

GSTN has released an additional set of Frequently Asked Questions (FAQs) based on feedback and queries received from various stakeholders. These FAQs (dated 04-12-2025) aim to help taxpayers better understand the reporting requirements for different tables of GSTR-9 and GSTR-9C, especially concerning value disclosures and reconciliations.
Access the complete FAQ document by clicking here.

— Team GSTN

Enroll in Our Practical Course on GSTR-9/9C (FY 2024-25)

Includes:

• GSTR-9/9C for FY 2024-25 & 2023-24

• Reconciliation: 2B vs 2A and 2B vs Books

GST FAQs – Summary of Key Queries & GSTN Replies

GST officers reprimanded by Allahabad HC for scrapping registrations without explaining the basis

Allahabad High Court Criticises GST Officials for Cancelling Registrations Without Citing Reasons

The Allahabad High Court has strongly criticised the GST department for routinely cancelling traders’ GST registrations without offering any justification. The court observed that such arbitrary action amounts to declaring the “economic death” of a business, as these casually issued cancellation orders impose severe and disproportionate hardship on taxpayers and disturb genuine commercial operations.

The bench emphasised that denying a dealer their statutory right to operate under GST without proper reasoning or a real chance to correct alleged mistakes runs contrary to the very principles on which the GST law is based.

Hearing a petition filed by Anil Art and Craft, the division bench of Justices Saumitra Dayal Singh and Indrajeet Shukla annulled an October 15 order of the Assistant Commissioner (State Tax), Bhadohi, which had cancelled the petitioner’s GST registration retrospectively from October 8.

The court directed that its judgment and a copy of the writ petition be forwarded to the commercial tax commissioner. Within 15 days, the commissioner has been asked to issue clear administrative instructions to all GST officers handling registration cancellations. These instructions must prescribe penalties for officers issuing non-speaking orders or denying reasonable opportunity to taxpayers, ensuring such lapses do not recur.

The petitioner had earlier received a show-cause notice alleging wrongful availment and transfer of fake input tax credit in violation of Section 16 of the GST Act. However, the court took serious note of how the officer handled the matter under the GST framework.

The judges pointed out that merely stating a reply is “not satisfactory” reflects only the final conclusion and not the reasoning behind it, falling short of the basic requirement of a reasoned administrative order. They added that the officer acted “carelessly” and in complete disregard of essential procedural safeguards.

Highlighting the gravity of cancelling a trader’s GST registration, the bench said that such an action effectively cripples the business — preventing it from issuing invoices and availing or passing on input tax credit. While the registration stands cancelled, all past tax liabilities and compliance obligations continue, making the impact even more severe.

The judgment dated November 20 noted that these casually passed cancellation orders impose undue hardship on traders and severely hamper legitimate business activity.